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  • Writer's pictureBen Birnbaum

Building Efficiency: An Overdue Promise

Buildings waste tons of energy and money.  This is far from news.


In our opinion, much of this inefficiency comes from underlying systems that most buildings are literally incapable of optimization due to the high cost of specialized labor. If you really want to know about what those systems are, check this link: EIA Building System Breakdown. Otherwise, soldier on.

A quick Google search and you’ll find decades worth of articles, statistics, scholarly papers, and case studies citing:

  1. Trillions of dollars in economic opportunity. Energy bills for most of the building stock range from $1-5 per square foot, not to mention the maintenance CapEx and labor savings potential from newer technology. (Sources 1, 2)

  2. An obvious climate opportunity. Buildings consume ~30-50% of U.S. energy use (Sources 3, 4)

  3. Case by case evidence is clear. Success story, after success story, after success story of the impressive financial and operational results of efficiency related investments. (Source 5)

Despite the above being true and easily knowable by building operators as a source of Net Operating Income (NOI) improvements, progress has not spread far beyond the very largest or the very newest of buildings. 99.2% of the 5,600,000 commercial buildings in the US are smaller than 200,000 square feet. And the vast majority of the buildings that will exist in 2050 are already built. So in other words… we’ve barely scratched the surface of the above economic and climate opportunities. Why?

The answer is pretty simple… we have bad data.  And no infrastructure to do anything meaningful with good data.

While the tech and business models that lead to successful case studies may exist, getting to scale simply requires data infrastructure that buildings have simply just not been built with. Getting data out of them has only ever been an afterthought (and god-forbid we have the ability to leverage that data to actively improve systems and processes).  One nameless building controls contractor admitted to me, “we were set up for failure. No matter how hard we try or how much our customers spend, we know we’ll never satisfy their expectations.”

Without the infrastructure to baseline performance, substantiate capital allocation, and enable building operators to make and enact decisions about operating changes, the related opportunities have consistently over-promised and under-delivered. A decades’ worth of disappointment. During that time, industry incumbents have fought tirelessly to keep that data disparate and in closed networks, but the market has pushed back.

Much to the success of companies like Aquicore, a recent Keyframe investment, and other peer Energy Management and Information Systems, the implementation of data infrastructure in buildings is beginning to spread far beyond the grips of Honeywell, Johnson Controls, Siemens, Schneider Electric and the like. Their customers & regulators demand the quality and transparency of data that they see in nearly every other market- and those are some powerful voices to help innovation find its way.

While this proliferation continues across the US and globally, in our opinion, several markets have the potential to open up or grow massively in service of commercial buildings:

  1. Building controls built with modern architecture

  2. Outsourcing of building system services, like Building Automation / Controls Contractors

  3. Distributed Energy Resource (DER) implementation & management

  4. Retrofit origination, financing, and project development

  5. Energy Service Companies (ESCOs), who have traditionally only served Municipal customers (full outsourcing of #2, #3, and #4)

Any of the above have the potential to be gigantic, and reshape economic and climate outcomes for decades to come. That said, in our opinion, we’re only at the beginning stages of what can be built off of the backs of the digitalization of the gigantic asset class known as commercial real estate.  And that’s what gets me so excited to focus on this space.

The Keyframe team dedicates itself to the markets it invests in where we believe we’ll see disruptive change over the next decade, and invests across the capital structure (debt and equity) of businesses in those markets. We try to be flexible to what the market needs to unlock value— versus the traditional segmentation of capital markets options for most companies today. We believe that building efficiency is one of those markets that can benefit from that flexibility.

If you agree, I’d like to meet you! Send me a note at


Sources: 1) 2) 3) 4) 5) A place to start of the endless sea of examples:


The views expressed here are those of the individual Keyframe Capital personnel quoted and are not the views of Keyframe Capital or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by Keyframe Capital. While taken from sources believed to be reliable, Keyframe has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

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